Drivers could soon feel more pain at the pump as an attack on oil fields in Saudi Arabia has forced the kingdom to cut production by 50%.
The cuts mean there will be 5.7 million less barrels of crude oil produced every day and this represents more than five percent of global daily production. Given this dramatic decrease, NBC reports brent crude futures climbed by 19.5% to $71.95 (£57.92 / €65.40) per barrel. That’s the biggest spike seen since the Gulf War.
The attack occurred this weekend and targeted Saudi Aramco facilities in Abqaiq and Khurais. The extent of the damage remains unclear, but the company’s President and CEO, Amin H. Nasser, said they’ve already begun working to repair the damage and restore production. The company also noted the sites were hit by “projectiles,” but confirmed no one was injured in the attack.
….sufficient to keep the markets well-supplied. I have also informed all appropriate agencies to expedite approvals of the oil pipelines currently in the permitting process in Texas and various other States.
— Donald J. Trump (@realDonaldTrump) September 15, 2019
In response to the attacks, President Trump announced he has authorized the release of oil from the government’s strategic petroleum reserve. This will only occur “if need” and “in a to-be-determined amount sufficient to keep the markets well-supplied.” The president also announced plans to speed up the approval process for oil pipelines in Texas and several other states.
Despite Trump’s announcement, Americans can still expect gas prices to climb. According to AAA spokesperson Jeanette Casselano, gas prices will likely increase this week and could climb as much as “a quarter per gallon throughout this month.”
On the bright side, AAA noted the United States has become less dependent on oil imported from Saudi Arabia. Citing data from the Energy Information Administration, the organization says imports fell from 35,600 barrels per day in first half of 2017 to 18,000 barrels per day in the first half of this year. This should help to further minimize the impacts of the attacks on consumers.
Yemeni Houthi rebels have claimed responsibility for the attack, but that has been meet with skepticism. As Reuters reported, Colonel Turki al-Malki said “The preliminary results show that the weapons [used in the attack] are Iranian and we are currently working to determine the location” were they were launched from. He added, the attack did not originate from Yemen as claimed by the rebels.
Furthermore, President Trump tweeted “There is reason to believe that we know the culprit” and “are locked and loaded depending on verification.” Officials in the administration have blamed Iran, but the country has denied this. However, Trump said country also claimed a U.S. drone was shot down in their airspace “when, in fact, it was nowhere close.”